Trump Announces Massive Global Tariffs and Eliminates De Minimis Exemption for China/Hong Kong

President Donald Trump has made good on his pledge to impose “universal,” as well as “reciprocal,” tariffs on goods shipped to the U.S. to counter what he considers “years of unfair trade practices” (for prior coverage, see the trade alert dated February 17, 2025). The universal tariff is subsumed into the reciprocal tariff policies unveiled on April 2, 2025 and is as aggressive as it is far-reaching, with over 180 countries—many of which have long-standing trade policies with the U.S.—caught in its cross hairs. Under the new measures, importers seeking to bring goods to the U.S. will face a baseline tariff of 10%, with higher rates applying to dozens of countries that run trade surpluses with the U.S. The sweeping—and some would argue “punitive”—tariffs sparked an immediate plunge in financial markets worldwide and many governments have signaled that they intend to introduce countermeasures, which would potentially further expand and escalate a global trade war (see below).

President Trump signed two executive orders (EOs) on April 2, which he coined “Liberation Day”: one EO implements the reciprocal tariff plan and the other eliminates the duty-free de minimis exemption for goods of Chinese origin. (Click here for the accompanying Fact Sheet released by the White House, which lists specific countries and industries that the Trump administration considers to be failing to provide the U.S. with reciprocal treatment.) 

The reciprocal tariff policy was outlined in a memorandum issued by the White House on February 13. The “Fair and Reciprocal Plan” aimed to address five specific areas, including the trade deficits the U.S. has with its trading partners, with President Trump promising that the plan would contain both tariff and nontariff measures against any U.S. trading partners that engage in trade practices deemed to be unfair or that contribute to imbalances. The plan also allows the U.S. to factor in “losses as a result of measures that disadvantage the United States as applied, regardless of what they are called or whether they are written or unwritten.” 

The Tariffs

Following the conclusion of the reviews mandated by the Fair and Reciprocal Plan, President Trump announced the new tariffs, relying on the International Emergency Economic Powers Act (IEEPA) as the legal basis for imposing the tariffs (as he did, e.g., in imposing new tariffs of 20% on goods of Chinese origin in February and March), the “national emergency” being the U.S. trade deficit. 

The tariff rates for individual countries is stated to be based on the barriers such countries create via monetary and nonmonetary levies imposed on U.S. imports (read a statement published by the U.S. Trade Representative explaining the methodology). Practically, the formula used each trading partner’s trade deficit with the U.S., divided by its exports, then divided by two. No measure of individual tariffs codes (U.S. duty rate versus foreign duty rate for products imported under the same Harmonized System tariff code by country) appears to have played any role in the final calculation of the reciprocal tariffs. 

The EO includes the following measures:

• A 10% ad valorem baseline tariff on all imports into the U.S. from all countries effective April 5, 2025; and 
• Country-specific tariffs (as set out in Annex 1 to the EO) that will apply as from April 9, 2025 in lieu of the 10% ad valorem tariff, regardless of whether the U.S. has a free trade agreement (FTA) in place with each of the 57 targeted countries. Examples of the announced tariff rates on U.S. trade partners include: 
  • Brazil: 10%
  • Cambodia: 49%
  • China: 34%
  • EU: 20%
  • India: 26%
  • Indonesia: 32%
  • Japan: 24%
  • Korea (ROK): 25%
  • Malaysia: 24%
  • South Africa: 30%
  • Switzerland: 31%
  • Taiwan: 32%
  • UK: 10%
  • Vietnam: 46%

Both sets of tariffs will apply in addition to any other tariffs that might apply, including the Normal Trade Relations duties, Section 301 tariffs on goods of Chinese origin that have been in place since 2018, IEEPA tariffs of 20% on goods of Chinese origin, any antidumping and countervailing duties, and for a few products, Section 201 “safeguard” tariffs.

The EO provides a list of merchandise categories that are exempt from the reciprocal tariffs:

• Any items already covered by Section 232 “national security” tariffs or products currently under investigation for potential Section 232 duties. These merchandise categories include steel and aluminum raw materials and derivative products, motor vehicles and auto parts, copper, pharmaceuticals, semiconductors, and lumber.
• Goods from Canada and Mexico—both countries are already subject to a 25% tariff on products that are not covered by the United States Mexico Canada Agreement (USMCA) and certain exceptions under the USMCA.
• All imports from “Column 2” countries in the Harmonized Tariff Schedule of the United States, e.g., Russia and North Korea.
• Certain critical minerals and all energy and energy products.
• All articles under 50 U.S.C. §1702(b) that are subject to IEEPA’s statutory exceptions (such as donations to relieve human suffering, information or informational materials, or acquisition of goods or services for personal use).

The reciprocal tariffs will be levied only on an article’s non-U.S. content, provided a minimum of 20% of the imported article’s value is U.S.-originating. U.S. content is defined in the EO as “the value of an article attributable to the components produced entirely or substantially transformed in the United States.” U.S. Customs & Border Protection is vested with the authority to verify an item’s U.S. content and whether it meets the agency’s “substantial transformation” test.

It is possible that the tariff rates could increase or decrease and the EO did not set forth any termination date. It is believed that each trading partner covered by a country-specific rate will seek to negotiate a reduction or elimination of the new tariffs. However, the EO outlines specific scenarios that would allow President Trump to modify/increase the tariffs; for example, if the reciprocal tariffs are not effective in resolving the overall U.S. trade deficit or any U.S. trading partner’s nonreciprocal trade arrangements or if the U.S. trading partner retaliates against the new U.S. reciprocal tariffs (through assessment of duties or other measures directed against U.S. exports). The EO also has a “catch-all” to increase duties if U.S. manufacturing and output worsen.

Congress has responded to the Executive Branch’s reliance on IEEPA by proposing legislation that would expand Congressional authority over tariffs. The legislation would require the president to notify Congress within 48 hours of declaring a national emergency and for Congress to explicitly approve new tariffs within 60 days. The bill (sponsored by several GOP senators) would also allow Congress to end any tariff at any time.

Elimination of the De Minimis Exemption for Chinese/Hong Kong-Origin Goods

As part of the response to the previous national emergencies announced under IEEPA to stem the flow of fentanyl and illegal migrants into the U.S., the second EO announced on April 2 terminates the duty-free de minimis exemption for imports of Chinese or Hong Kong-originating goods. This exemption from the payment of duties and fees for imports valued under US$ 800 (for one shipment on one day) has been viewed by U.S. government officials as widely exploited by Chinese e-commerce companies to avoid the payment of Section 301 and other duties.

Effective May 2, all relevant postal items containing goods that are sent through the international postal network that would otherwise be eligible for the de minimis exemption will be subject to a U.S. Customs duty rate of 30% of their value or US$ 25 per item (increasing to US$ 50 per item after June 1).

Retaliatory Tariffs

Many governments have made statements about whether or not they plan countermeasures or have put in place their own reciprocal tariffs in response to the previous IEEPA tariffs or the new IEEPA universal and reciprocal tariffs. A summary of responses by each major trading nation is set forth below: